Correlation Between Federal Life and Principal Financial
Can any of the company-specific risk be diversified away by investing in both Federal Life and Principal Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Federal Life and Principal Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Life Group and Principal Financial Group, you can compare the effects of market volatilities on Federal Life and Principal Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Federal Life with a short position of Principal Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Life and Principal Financial.
Diversification Opportunities for Federal Life and Principal Financial
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Federal and Principal is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Federal Life Group and Principal Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Financial and Federal Life is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Federal Life Group are associated (or correlated) with Principal Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Financial has no effect on the direction of Federal Life i.e., Federal Life and Principal Financial go up and down completely randomly.
Pair Corralation between Federal Life and Principal Financial
If you would invest 7,365 in Principal Financial Group on January 25, 2024 and sell it today you would earn a total of 851.00 from holding Principal Financial Group or generate 11.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 0.48% |
| Values | Daily Returns |
Federal Life Group vs. Principal Financial Group
Performance |
| Timeline |
| Federal Life Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Principal Financial |
Federal Life and Principal Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Life and Principal Financial
The main advantage of trading using opposite Federal Life and Principal Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Life position performs unexpectedly, Principal Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Principal Financial will offset losses from the drop in Principal Financial's long position.| Federal Life vs. American Equity Investment | Federal Life vs. American Equity Investment | Federal Life vs. American Equity Investment | Federal Life vs. AIA Group |
| Principal Financial vs. State Street Corp | Principal Financial vs. Bank of New | Principal Financial vs. SEI Investments | Principal Financial vs. Affiliated Managers Group |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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